Columbia Missourian

We were contacted by the Columbia Missourian yesterday to tap our expertise on the local mortgage market. The article has not been printed yet, but it was just a basic article about the market, what buyers should look for, and the sub-prime fall out.

We advised that the market was fairly strong for homes under $200k, but very weak on homes $250k and up.

Just like most of the mortgage articles lately, this interview focused on the sub-prime fall out and foreclosures. First off, only 25% of our loans are sub-prime. Based on our experience we gave them some feedback. There are brokers out there that put borrowers in bad situations, but if a broker does things the right way the borrower is fully aware of everything that is going on! We want to educate ALL of our borrowers every step of the way, especially our sub-prime borrowers. After we do this, the borrower must follow the plan.
Almost all sub-prime loans are on ARM's with a pre-payment penalty. This is not something that is done to intentionally hurt the borrower. The reason someone is considered to be a sub-prime borrower is because they have had past credit problems. They must go through a transition phase in order to get back on track. If a borrower in this situation must purchase a home or refinance, they will be given a sub-prime loan (also known as a band-aid loan). It is our job to find them the best sub-prime loan/rate that fits their particular situation. As we all know these loans have high rates. The only way to bring them down is with an ARM product that includes a pre-payment penalty. Now it is critical for the broker to educate the borrower about the product they are on and what they must do in the meantime to fix their credit problems. After this is done, the borrower must follow through. If the plan is followed, in a couple years we can come back and refinance them into a conforming product. We have done many of these and the borrower's are unbelievably happy. They fell under the misconception that they would be a sub-prime borrower forever! The reason you see so many foreclosures is because these borrowers don't follow the plan, an unfortunate circumstance comes up, or they shouldn't have purchased a home in the first place! If the broker does his job the majority of the blame comes back on the borrower. If the borrower isn't educated, I am fine with the blame being put on the broker!

Lastly, we were asked what a borrower can do to avoid many of the horror stories. Simply put, the borrower should have no worries if they can find a realtor and lender that is experienced and reputable. Make sure you do your homework. The realtor will listen to your needs and find you a home that fits you. They will make sure all inspections are done and that you aren't buying a lemon! The lender will provide you with the best loan for your situation and educate you on your product. The lender should also make sure your payment and closing costs are comfortable for your budget and that everything is disclosed.

Professional Mortgage Group is happy to see that publications like the Columbia Missourian and the Columbia Business Times see us as a reputable company with expertise. We have been asked to be used as a voice from time to time. This Missourian article will be our first experience and we hope nothing is taken out of context or mis-quoted. We will soon see. All in all I think it should be a good article.

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Professional Mortgage Group, Inc
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